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Letter before action - debt recovery

As a business, successfully recovering unpaid debts can be absolutely vital to your cashflow and the smooth running of your organisation. A debt recovery letter before action will inform the business that owes you money of your intention to pursue the debt through legal action, and is usually the first stage of a debt recovery process.

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What is a letter before action?

A solicitor’s letter before action demands payment from the debtor within 14 days failing which court action will be commenced. The pre-action protocols which are the court’s guidelines to pre-action conduct provide that a debtor should be given a reasonable time to respond and that as a general rule 14 days will be regarded as a reasonable time. The practice direction containing the protocol may be found at: pre-action conduct and protocols. This protocol affects business to business debts unless the debtor is a sole trader.

Failure to comply with the protocol can lead to costs consequences later if a claim is disputed.

Our debt recovery statistics show that in 70% of cases where a letter before action is issued, court proceedings have been avoided. Speak to us on  0161 696 6170 for more information on sending this type of letter before claim action is taken.

Pre-action protocol

If you are a business (including sole traders and public bodies) claiming payment from an individual (including a sole trader), a new pre-action protocol came into force on 1 October 2017 will apply to you.

For further information as to how this will affect you, click here - Letter of claim

Unpaid debts hold up your business, affecting cash flow, creating uncertainty and potentially preventing payment of your staff or creditors, harming your reputation. It’s crucial for any business to ensure that those you trade with do so on your terms. For debt recovery advice that’s tailored to your business, call our team on 01616 966 229.

The benefits of sending a debt letter before action

When it comes to debt recovery, a solicitor’s letter before action is a highly effective way of communicating how seriously you are taking the situation and, more often than not, can be the only type of action needed in order for the debt to be repaid.

You can send a debt collection letter before action from your business directly, but they tend to have more gravitas and a better outcome when a debt recovery solicitor sends the letter on behalf of your business. Letters before action are the correct protocol to take for businesses claiming debt from another business, but not an individual. See below for a new pre-action protocol for businesses seeking to recover debts from individuals (including sole traders).

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